2017年-世界发展银行全球_Trade_Policy_Reforms_for_the_Twenty_First_Century___The_Case_of_Nepal_64页_4mb

Summary of Trade Policy Reforms for the Twenty First Century: The Case of Nepal

Core Content

This report analyzes Nepal's trade policy landscape and provides recommendations to enhance its competitiveness and growth potential. Nepal has been one of the slowest-growing countries in South Asia, with growth averaging 4% over the past decade. To achieve the government's goal of becoming a lower middle-income country by 2020, Nepal needs to move away from its remittance-driven growth model and adopt more effective trade and investment policies.

Main Views and Key Findings

1. Current Trade and Investment Challenges

• Nepal's growth is heavily reliant on remittances, which are a major source of foreign exchange and income.
• Remittances contribute to trade deficits and real exchange rate appreciation, which biases against exports.
• Nepal's trade orientation is below average, with both exports and imports not fully aligned with its economic potential.
• Manufacturing and services sectors have not generated sufficient employment, especially for low-skilled workers.
• Nepal has limited participation in global value chains (GVCs), with foreign investment averaging only 0.2% of GDP.

2. Trade Potential and Integration Opportunities

• Nepal has significant untapped trade potential with high-income and fast-growing economies.
• Trade complementarity indices suggest that Nepal should diversify its exports into East Asia and the Pacific, which are fast-growing markets.
• Nepal is under-exporting to these regions and over-exporting to India, which may be hindering export growth.
• The South Asian Free Trade Area (SAFTA) has not been effectively utilized by Nepalese exporters, and GSP opportunities remain underexploited.
• The United States allows diagonal accumulation of origin under GSP, which could help Nepal form regional value chains for exports to the EU.

3. Policy Recommendations

To Improve the Import-to-Export Environment

• Reduce import-based taxation and anti-export bias: Lower tariffs on key intermediates to boost export competitiveness. A gradual approach is recommended to avoid large revenue losses in the short run.
• Simplify and improve the duty-drawback system: The Cash Incentive to Exporters (CISE) should be redesigned to target new export flows, simplify the filing process, and ensure transparency in fund allocation.
• Support export compliance with GSP rules of origin: Provide assistance to firms in managing documentation and certification for GSP eligibility, especially for products with high export potential.

To Tap into Unrealized Trade Potentials

• Focus export promotion on high-potential products and markets: Direct efforts towards markets where Nepal is under-exporting, and products that have untapped preferences.
• Provide export intelligence: Support small and medium enterprises (SMEs) with information on shipment costs, consumer preferences, and compliance with international standards.

To Increase GVC Participation

• Deepen integration in services and investment: Nepal needs to move beyond shallow trade agreements and promote deeper integration, including services and investment policies, to access global value chains.
• Strengthen the BBIN transit agreement: This is crucial for reducing trade costs and improving connectivity, especially for a landlocked country like Nepal.
• Attract and retain FDI: Simplify FDI repatriation and hiring processes, and reduce entry barriers such as foreign ownership limits and sector caps.

To Improve the Export Climate Behind the Border

• Enhance electricity supply: Invest in hydropower to ensure long-term access to competitive energy.
• Promote competition in key services markets: Improve efficiency in transport, telecommunications, and financial services to reduce trade costs.
• Reduce labor market rigidities: Facilitate access to skilled labor and promote flexibility in employment to boost job creation in the tradable sector.

Key Information

• Trade Potential: Nepal is underperforming in trade, with a 25% decline in its share of global trade from 2003 to 2014.
• Export Performance: Nepal's merchandise export growth dropped from 19% in the 1990s to 0.6% in the following decade.
• Tariff Reforms: The report outlines five scenarios of tariff reform, with varying impacts on revenue and export competitiveness.
• Revenue Impact: A comprehensive tax reform could lead to revenue losses of up to 9.9%, but targeted reforms on key intermediates would result in minimal losses (0.2–0.9%).
• Welfare Gains: Trade liberalization could lead to an average net welfare gain of 1.7% of GDP, with greater benefits for the poor than the rich.
• Implementation Challenges: Complex filing procedures, limited resources, and lack of transparency in incentive allocation are major barriers to effective export promotion.

Policy Levers for Reform

• Tariff Code Simplification: Prioritize reductions in tariffs on intermediates used in key export sectors.
• Enhanced Export Promotion: Redesign the CISE to support new and existing exporters, improve transparency, and promote export intelligence.
• Deepening Integration: Move beyond border tariff reductions to include services and investment policies, and seek deeper integration with ASEAN and other global trade blocs.
• Strengthening BBIN: Improve connectivity and reduce trade costs through a stronger regional transit agreement.
• FDI Reforms: Facilitate FDI inflows by streamlining approval processes, removing ownership restrictions, and improving access to non-equity investment modes.
• Behind-the-Border Reforms: Promote competition in services, ensure reliable electricity supply, and enhance labor market flexibility.

Conclusion

Trade policy reforms are critical for Nepal to enhance competitiveness, diversify its export markets, and move towards a more sustainable growth model. These reforms should be implemented gradually, with a focus on reducing anti-export bias, improving export promotion mechanisms, and deepening integration with global and regional trade partners. The report emphasizes that these reforms are welfare-enhancing and pro-poor, with the potential to significantly improve Nepal's economic performance.